Aquisition Loan Rules

Here are some general rules that lenders look for immediately when considering a business acquisition loan.

  • Is this a turn around business acquisition? Lenders do not like to lend money to failing businesses. If there is a declining sales trend you will have an extremely difficult time finding a lender.
  • How long has the business being acquired been in operation?
  • What tangible assets does the business have? How much of the purchase price is intangible assets like goodwill/brand equity?
  • Strategic Experience: Does the borrower have strategic management experience?
  • Technical Experience: Does the borrower know how to run the basic business functions?
  • What is the length of time the borrower has in the industry? Lenders look for 3-5 years of direct industry experience.
  • How much skin in the game will be present by the new owners? There is no such thing as 100% financing in the loan world.

If you take the time to consider these questions/rules above concerning business acquisitions loans, you will be much better prepared to visit with your banker about your loan needs. You will also be better prepared to take over the business.

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